AS WITH London buses, don’t worry if you miss a financial crisis; another will be along shortly. The latest study on long-term asset returns from Deutsche Bank shows that crises in developed markets have become much more common in recent decades. That does not bode well.Deutsche defines a crisis as a period when a country suffers one of the following: a 15% annual decline in equities; a 10% fall in its currency or its government bonds; a default on its national debt; or a period of double-digit inflation. During the 19th century, only occasionally did more than half of countries for which there are data suffer such a shock in a single year. But since the 1980s, in numerous years more than half of them have been in a financial crisis of some kind.The main reason for this, argues Deutsche, is the monetary system. Under the gold standard and its successor, the Bretton Woods system of fixed exchange rates, the amount of credit creation was limited. A country that expanded its money supply too quickly would suffer a trade deficit and pressure on its currency’s exchange rate; the government would react by slamming on the monetary brakes. The result was that it was harder for financial bubbles to inflate.But since the early 1970s more countries have moved to a floating exchange-rate system. This gives governments the flexibility to deal with an economic crisis, and means they do not have to subordinate other policy goals to maintaining a currency peg. It has also created a trend towards greater trade imbalances, which no longer constrain policymakers—the currency is often allowed to take the strain.Similarly, government debt has risen steadily as a proportion of GDP since the mid-1970s. There has been little pressure from the markets to balance the budget; Japan has had a deficit every year since 1966, and France since 1993. Italy has managed just one year of surplus since 1950. In the developed world, consumers and companies have also taken on more debt.The result has been a cycle of credit expansion and collapse. Debt is used to finance the purchase of assets, and the greater availability of credit pushes asset prices higher. From time to time, however, lenders lose faith in borrowers’ ability to repay and stop lending; a fire sale of assets can follow, further weakening the belief in the creditworthiness of borrowers.

Central banks then step in to cut interest rates or (since 2008) to buy assets directly. This brings the crisis to a temporary halt but each cycle seems to result in higher debt levels and asset prices. The chart shows that the combined valuation of bonds and equities in the developed world is higher than ever before.All this suggests that the financial system could be due another crisis. Deutsche makes several suggestions at to what might cause one, from a debt-related crash in China, through the rise of populist political parties to the problem of illiquidity in bond markets.The most likely trigger for a sell-off is the withdrawal of support by central banks; after all, the monetary authorities are generally credited with having saved the global economy and markets in 2009. In America the Federal Reserve is pushing up interest rates and reducing the size of its balance-sheet; the European Central Bank seems likely to cut the scale of its asset purchases next year; the Bank of England might even increase rates for the first time in more than a decade.Central banks are well aware of the dangers, of course; that is why interest rates are still so low, even though developed economies have been growing for several years. But the process of withdrawing stimulus is tricky. A big sell-off in the government-bond markets in 1994 started when the Fed tightened policy after a period when rates were kept low during the savings-and-loan crisis.The high level of asset prices means that any kind of return to “normal” valuation levels would constitute a crisis, on Deutsche’s definition. That might mean that central banks are forced to change course and loosen policy again. But the process would take a little time; central banks will not want to appear too enslaved to the markets.Many investors will want to ride out the volatility; that has been a winning strategy in the past. The problems will emerge among those investors who have borrowed money to buy assets—in America the volume of such debt exceeds the level reached in 2008. The big question is which is the most vulnerable asset class. American mortgage-backed securities were the killers in 2008; it is bound to be something different this time round.

THE human face is a remarkable piece of work. The astonishing variety of facial features helps people recognise each other and is crucial to the formation of complex societies. So is the face’s ability to send emotional signals, whether through an involuntary blush or the artifice of a false smile. People spend much of their waking lives, in the office and the courtroom as well as the bar and the bedroom, reading faces, for signs of attraction, hostility, trust and deceit. They also spend plenty of time trying to dissimulate.Technology is rapidly catching up with the human ability to read faces. In America facial recognition is used by churches to track worshippers’ attendance; in Britain, by retailers to spot past shoplifters. This year Welsh police used it to arrest a suspect outside a football game. In China it verifies the identities of ride-hailing drivers, permits tourists to enter attractions and lets people pay for things with a smile. Apple’s new iPhone is expected to use it to unlock the homescreen.

Set against human skills, such applications might seem incremental. Some breakthroughs, such as flight or the internet, obviously transform human abilities; facial recognition seems merely to encode them. Although faces are peculiar to individuals, they are also public, so technology does not, at first sight, intrude on something that is private. And yet the ability to record, store and analyse images of faces cheaply, quickly and on a vast scale promises one day to bring about fundamental changes to notions of privacy, fairness and trust.

The final frontier

Start with privacy. One big difference between faces and other biometric data, such as fingerprints, is that they work at a distance. Anyone with a phone can take a picture for facial-recognition programs to use. FindFace, an app in Russia, compares snaps of strangers with pictures on VKontakte, a social network, and can identify people with a 70% accuracy rate. Facebook’s bank of facial images cannot be scraped by others, but the Silicon Valley giant could obtain pictures of visitors to a car showroom, say, and later use facial recognition to serve them ads for cars. Even if private firms are unable to join the dots between images and identity, the state often can. China’s government keeps a record of its citizens’ faces; photographs of half of America’s adult population are stored in databases that can be used by the FBI. Law-enforcement agencies now have a powerful weapon in their ability to track criminals, but at enormous potential cost to citizens’ privacy.The face is not just a name-tag. It displays a lot of other information—and machines can read that, too. Again, that promises benefits. Some firms are analysing faces to provide automated diagnoses of rare genetic conditions, such as Hajdu-Cheney syndrome, far earlier than would otherwise be possible. Systems that measure emotion may give autistic people a grasp of social signals they find elusive. But the technology also threatens. Researchers at Stanford University have demonstrated that, when shown pictures of one gay man, and one straight man, the algorithm could attribute their sexuality correctly 81% of the time. Humans managed only 61%. In countries where homosexuality is a crime, software which promises to infer sexuality from a face is an alarming prospect.

Keys, wallet, balaclava

Less violent forms of discrimination could also become common. Employers can already act on their prejudices to deny people a job. But facial recognition could make such bias routine, enabling firms to filter all job applications for ethnicity and signs of intelligence and sexuality. Nightclubs and sports grounds may face pressure to protect people by scanning entrants’ faces for the threat of violence—even though, owing to the nature of machine-learning, all facial-recognition systems inevitably deal in probabilities. Moreover, such systems may be biased against those who do not have white skin, since algorithms trained on data sets of mostly white faces do not work well with different ethnicities. Such biases have cropped up in automated assessments used to inform courts’ decisions about bail and sentencing.Eventually, continuous facial recording and gadgets that paint computerised data onto the real world might change the texture of social interactions. Dissembling helps grease the wheels of daily life. If your partner can spot every suppressed yawn, and your boss every grimace of irritation, marriages and working relationships will be more truthful, but less harmonious. The basis of social interactions might change, too, from a set of commitments founded on trust to calculations of risk and reward derived from the information a computer attaches to someone’s face. Relationships might become more rational, but also more transactional.In democracies, at least, legislation can help alter the balance of good and bad outcomes. European regulators have embedded a set of principles in forthcoming data-protection regulation, decreeing that biometric information, which would include “faceprints”, belongs to its owner and that its use requires consent—so that, in Europe, unlike America, Facebook could not just sell ads to those car-showroom visitors. Laws against discrimination can be applied to an employer screening candidates’ images. Suppliers of commercial face-recognition systems might submit to audits, to demonstrate that their systems are not propagating bias unintentionally. Firms that use such technologies should be held accountable.Such rules cannot alter the direction of travel, however. Cameras will only become more common with the spread of wearable devices. Efforts to bamboozle facial-recognition systems, from sunglasses to make-up, are already being overtaken; research from the University of Cambridge shows that artificial intelligence can reconstruct the facial structures of people in disguise. Google has explicitly turned its back on matching faces to identities, for fear of its misuse by undemocratic regimes. Other tech firms seem less picky. Amazon and Microsoft are both using their cloud services to offer face recognition; it is central to Facebook’s plans. Governments will not want to forgo its benefits. Change is coming. Face up to it.

Private banking is emerging from a controversial and colourful history after a decade-long transformation. The fast-digitising industry is becoming modern, transparent and well regulated. It is attempting to shed the image of impenetrable secrecy designed to shield questionably acquired assets from international tax and law enforcement authorities. But a new battle for clients’ assets is just beginning, underlined by questions about the industry’s purpose. Should private banking just be about the cold-eyed pursuit of financial returns for clients or also the “softer” strategies of philanthropy, succession planning and family networking? Moreover, should bankers restrict advice to customers’ portfolios or extend it to include entrepreneurial interests? The core skills of private banks need to be market-related, stresses Michel Longhini, chief executive of private banking at Union Bancaire Privée in Geneva, responsible for client assets of SFr119bn (€108bn). His bank defines itself first “as an asset manager for private clients and institutions”. Further along the lakeside artery of the Rue du Rhône, the story is similar. “We set up Banque Syz [in 1996] because asset management was not being taken seriously enough by traditional private banks,” recalls Eric Syz, one of the city’s best-known private bankers. He was holding court in his office above the Jimmy Choo shoe shop. “Once we understand what a client’s ambitions are, that is where asset management comes in. It is the end-product.”Things have not always gone well, however. After 2008, private banks were deserted by many clients who had been trapped in illiquid hedge funds, with some exposed to US fraudster Bernard Madoff. With returns difficult to generate in today’s low interest-rate environment, Syz is switching from portfolios diversified across quoted markets into longer-term private equity investments, composed of five to 10 positions.

Eric Syz, one of Geneva’s best-known private bankers

Mirabaud & Cie, another medium-sized Geneva bank, is also moving into private equity, investing clients’ money in smaller unquoted European family-owned companies. “Investors are tired of finance without a face, people without responsibility. We are talking not just about investing money for people, but about their emotions,” says Lionel Aeschlimann, managing partner and head of asset management at Mirabaud. Particularly among younger clients, private banks are seeking to cater to this emotional need. While the industry’s business model directly links size of assets gathered and complexity of how they are managed to revenues, a new generation of small business founders, still in the process of accumulating wealth, is open to new ideas. They want bankers to establish networks of like-minded, socially and environmentally aware entrepreneurial clients.“Younger clients are much more receptive to this wider range of ancillary services that a bank can offer,” says Sebastian Dovey, managing partner of Scorpio Partnership, a wealth management consultancy. “But this should not be delivered to the detriment of the bank being able to deliver on the core skill set of asset management.”

Lionel Aeschlimann, managing partner at asset manager Mirabaud

Private banks must move on from pure portfolio management to look more at client relationships, say industry leaders. “If you focus only on a small piece of the action, you get a short attention span,” says Joe Stadler, head of global ultra-high net worth at UBS Wealth Management, personally responsible for nearly SFr599bn of the bank’s SFr2.2tn in invested assets. “To get a bigger attention span, you need to focus on the client’s business, so it’s important that we have an investment bank.”He also lists the importance of helping the client’s family manage its succession plan and indulge in “passions” such as wine, art or philanthropy as key to the relationship.Across the way in Zurich’s central hub of Paradeplatz is Credit Suisse, where a combination of investment and private banking is at the core of the bank’s business model. Its strategists target “asset rich, cash poor” entrepreneurs, with corporate, institutional-style needs, competing for new ultra-wealthy clients with UBS, JPMorgan, Morgan Stanley and Goldman Sachs. The aim is to make private and investment banking so interconnected that clients will find positions “hard to unwind”, Credit Suisse states.But analysts suggest this might not be the best direction for private banking. While Credit Suisse says two-thirds of its entrepreneurial clients use the investment bank’s services when selling or borrowing against their business, this does not match industry trends. The “one bank” policy combining private and investment banking has enjoyed only sporadic commercial success for UBS and Credit Suisse, says Zurich-based consultant Ray Soudah, chief executive of MilleniumAssociates. His research shows the majority of private clients do not use their investment bank’s corporate advisory services and those requiring such services prefer to source them elsewhere. While Millenium has opened its own M&A “advice and execution” service for business owners and entrepreneurs, private banks are setting up internal client networks to connect buyers and sellers of businesses. BNP Paribas Wealth Management has designed a “Leaders Connection” mobile phone app through which clients with wealth exceeding €100m can share details of assets, with the prospect of buying, selling or co-investing.These institutions are all aware they need to adapt in order to survive, expecting further consolidations on the horizon. Soudah, himself a former private banking executive, expects dramatic change in this sector, probably over the next 12 months.“Two of the top five global banks will not exist as they are known today,” he says, “either merging with each other or taking over their smaller peers as the growth of operating costs, including developing fintech solutions, forces strategies to be cost, not revenue driven.”

Deflation and the Markets; are deflationary forces here to stay Machines are worshipped because they are beautiful and valued because they confer power; they are hated because they are hideous and loathed because they impose slavery. Bertrand RussellManufacturing output continues to improve, even though the number of manufacturing jobs in the U.S. continues to decline and this trend will not stop. While some Jobs have gone overseas, the new trend suggests that automation has eliminated and will continue to eliminate a plethora of jobs. As this trend is in the early phase, the momentum will continue to build in the years to come.Machines are faster, cheaper and don’t complain; at least not yet. So from a cost cutting and efficiency perspective, there is no reason to stick with humans. This, in turn, will continue to fuel the wage deflation trend. Sal Guatieri an Economist at the Bank of Montreal in a report titled “Wage Against the Machine,” states that automation is responsible for weak wage growth.“It’s unlikely that insecurities from the Great Recession are still weighing, given high levels of consumer confidence,” he wrote. “However, automation could be a longer-lasting influence on worker anxieties and wages. If so, wages could remain low for a while, restraining inflation and interest rates.”Guatieri goes on to state that “The defining feature of a job at risk from automation is repetition”. This puts a lot of jobs at risk, many of which fall under the so-called highly skilled category today; for example, Accountants, Lawyers, Radiologists, X-Ray technician, etc.

North American business order record number of robots

In 2016, they order 35,000 robots, 10% more than in 2015. But that is nothing compared to China, which ordered 69,000 robots in 2016, South Korea ordered 38,000 and Japan for its small size ordered 35,000 robots. This proves that jobs are not going overseas but are being taken over by machines. Nothing will stop this trend; a trend in motion is unstoppable.The largest user of robots is the automotive sector; in North America, over 20,000 of the 35,000 robots went to the automotive sector. Once upon a time, over 80% of the work done in this sector was done by humans, but robots perform today over 80%.The total amount spent on robots in 2015 was $71 billion; experts project that this amount will surge to almost $135 billion by 2019. The trend continues to gain traction. Amazons purchase of whole foods and Lidl’s entry into the US market has triggered a grocery war, and automation is going to be one of the main ways to remain competitive in this industry. Amazon already has a massive robot workforce; they use over 45,000 robots. Sales of robots will triple from current levels by 2019

The number of robots sold in the US will jump by 300% over the next nine years, according to the ABI research. It’s simple math; more automation equates to fewer jobs. One industrial robot replaces about six jobs. For now, the automotive industry continues to lead the way, but as companies are pushed to become more competitive, we expect companies in every sector to embrace automation.

Source: Robotics industries Association

Costs are plungingIn 2010 the average cost of a robot was $150,000; today the price has dropped to below $25,000, a drop of over 80%. As prices drop more companies will seek the efficiencies that come with using robots. A day is fast approaching where the price could drop below $5,000 suddenly making them affordable for almost any small sized business.

The death of UnionsUnions continue to push for higher minimum wages while the purchasing price of robots continues to decline; this is not a conducive environment for most unions. In the era, where raising prices is not an option, the only leeway most businesses have is to cut costs. The human factor is the most expensive factor in any business, and that is where the focus will be going forward.

Robots are becoming more ubiquitous across a multitude of industriesThe image below speaks a thousand words.

Source: Robotics Industries AssociationConclusion The introduction of machines and tools created a significant demand for unskilled labor (it rose from 20% of the workforce to 39% from 1700 to 1850). Machines either pushed craftsmen out of the labor market completely, or encouraged employers to decrease their workers' wages. The Economist cites this exact situation in which wages fell drastically in the early 1800s, not recovering until 1960.GE's recently introduced vision inspection system, as my colleague Chris Matthews, reported. In theory, machines can help workers become more productive, and productivity leads to higher wages — but that's not the case. Machines like this one at GE actually reduce the need for workers — especially those who are typically paid between $20 and $40 per hour in this field. Full StoryAs machines replace humans, the cost of producing goods will drop, and as more people will be competing for the remaining jobs, wages will trend downwards. Wages will rise in some specialised sectors, but these jobs will demand a specialised set of skills, for example, robotics. It appears that AI will only exacerbate the current situation in the years to come. Therefore, deflation and not inflation is what we might have to deal with for years to come.Man will never be enslaved by machinery if the man tending the machine be paid enough.Karel Capek

One of the hallmarks of a successful society is the widespread belief that education is a key to success. For that to be true there have to be 1) enough jobs farther up the food chain to make four more years of studying worthwhile, and 2) schools that are good and cheap enough to make the equation work financially.The US is losing both:

(Wall Street Journal) – Americans are losing faith in the value of a college degree, with majorities of young adults, men and rural residents saying college isn’t worth the cost, a new Wall Street Journal/NBC News survey shows.

The findings reflect an increase in public skepticism of higher education from just four years ago and highlight a growing divide in opinion falling along gender, educational, regional and partisan lines. They also carry political implications for universities, already under public pressure to rein in their costs and adjust curricula after decades of sharp tuition increases.

Overall, a slim plurality of Americans, 49%, believes earning a four-year degree will lead to a good job and higher lifetime earnings, compared with 47% who don’t, according to the poll of 1,200 people taken Aug. 5-9. That two-point margin narrowed from 13 points when the same question was asked four years earlier.

The shift was almost entirely due to growing skepticism among Americans without four-year degrees—those who never enrolled in college, who took only some classes or who earned a two-year degree. Four years ago, that group used to split almost evenly on the question of whether college was worth the cost. Now, skeptics outnumber believers by a double-digit margin.

Conversely, opinion among college graduates is almost identical to that of four years ago, with 63% saying college is worth the cost versus 31% who say it isn’t.

Big shifts occurred within several groups. While women by a large margin still have faith in a four-year degree, opinion among men swung significantly. Four years ago, men by a 12-point margin saw college as worth the cost. Now, they say it is not worth it, by a 10-point margin.

Likewise, among Americans 18 to 34 years old, skeptics outnumber believers 57% to 39%, almost a mirror image from four years earlier.Today, Democrats, urban residents and Americans who consider themselves middle- and upper-class generally believe college is worth it; Republicans, rural residents and people who identify themselves as poor or working-class Americans don’t.Research shows that college graduates, on average, fare far better economically than those without a degree. For example, the unemployment rate is 2.7% among college graduates, compared with 5.1% among high school graduates who never attended college, and Labor Department research shows that bachelor’s degree recipients earn higher salaries than those who never went to college. But the wage premium of getting a degree has flattened in recent years, Federal Reserve research shows.Student debt has surged to $1.3 trillion, and millions of Americans have fallen behind on student-loan payments.“Costs have gone up considerably to the point that I think there are a number of people who maybe rightfully say, ‘I’m not in the league of Harvard and maybe not even in the league of really good state schools,’” said Doug Webber, a Temple University econimics professor. Many of those Americans are concluding that paying high tuition at less-prestigious schools isn’t worth it.College is clearly still a good thing, just not at current prices. Put another way, higher ed has been in a bubble fueled by government loans and deceptive marketing, and now that bubble is bursting. The old model of extended adolescence in which mom/dad/Uncle Sam cover five or more years of partying and sampling various majors is now beyond the means of more than half the population.And the trend is just getting started, as soaring debts make it harder for future governments to subsidize higher ed and automation makes an ever-longer list of degrees pointless. The result: The gap between educational haves and have-nots will continue to widen, as formerly middle-class kids find themselves with – at best – working class prospects. And the political and financial instability that flow from inequality will define the coming decade.

If you know the other and know yourself, you need not fear the result of a hundred battles.

Sun Tzu

We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.